CAVUTO REPORTS THAT BUSH CONSIDERING SCRAPPING THE IRS CODE!!!

Fox News Channel | November 6, 2002 | n/a

[Tree of Liberty]

Neil Cavuto just interviewed Mitchell E. Daniels, Jr., the director of the OMB, and Neil let it be known that he's hearing rumblings that Pres. Bush is considering a total re-write of the tax code and that SecTreas O'Neill is strongly pushing a national retail sales tax!

[Technogeeb]

Doesn't really matter, one court case seeking administrative remedy in the nature of an injuction, and removal of obvious erroneous number and it replacement with proper statistical value is all it takes to put the crunch on your concocted scenario.

Unfortunately, the courts are an inadequate guarantor of liberty. First, the federal government can't be sued unless it gives you permission to sue it, and second (as a practical example), the exact same types of abuses of administrative authority that have occurred in the past have not been able to be corrected through the courts (once again, Bensen's banning of some shotguns is a great example of this failing of the system).

Your scenarios are merely speculative and have little to recomend them or even suggest a rational basis in view of historical processes and modes in the publication and implementation of statute sensitive statistics

Of course the scenario is only speculative; since the particular power (the handouts, not the ability to manipulate the poverty level) being described has not yet been given to the bureaucracy. But if it does, I have no doubt that it will ultimately be abused. Perhaps that makes me paranoid (or more accurately, just pessimistic), but the continual abuse of government power that has been seen in the past is strongly suggestive that any such future powers granted to the bureaucracy will be equally abused if given enough time. I would prefer to simply not give that power to government in the first place, at least not without more significant checks on that power than are already in place or have been proposed.

Now if Congress were to enact such a gross change in methodology to specifcally implement such shenannigans that would be another matter another matter, but we are subject to that right now so your imaginative worries mean nothing through extension onto a new statute. The statutes are subject to legislative change now an can modify the current law to achieve severe magnitude changes in tax law now without risking the least in challenges before the courts

That, too, concerns me, but not as much as placing that power in the hands of an unelected bureaucracy. If provided with the choice, I would certainly prefer to limit government (at the federal level at least) to those items explicitly granted in the Constitution (the enumeration in article 1, secion 8, etc.). But since only I and a few other "tin-foil paranoids" are the only ones who still believe the federal government should be limited that way, I am stuck with accepting the status-quo of Congressional power. But that isn't an excuse for granting a bureaucracy similar unchecked power.

[Technogeeb]

Without an act of Congress, whatever the bureaucracy publishes becomes defacto law.

Only if it passes through statutorily prescribed process for the proposal, board review, public review process, and publication of regulations, and then survive the 90 day Congressional review period after publication

Once again, as has already been shown, that process is subject to abuse. The "public review process" merely means the public can make comments, which can then be ignored. The "board review" is nothing more than the administration itself in most cases. If there really was anything the public could do to stop such abuses of power by the bureaucracies, they would have been used to stop Bensen's shotgun ban (which the NRA or GOA would have attempted) or the HHS HIPAA regulations (which a huge number of medical, insurance, and software companies, not to mention privacy groups, opposed for very valid reasons).

It is clear you have a very limited understanding of the processes involved in proposing, implementing, and challenge of regulations

Sorry, but you are quite mistaken. I have very intimate knowledge of the process (especially the "challenge" part), and I am sadly aware of its drastic inadequacies (mail me privately if you would like details and associated horror stories).

[ancient_geezer]

But that isn't an excuse for granting a bureaucracy similar unchecked power.

Bureaucracy, contrary to the unimformed opinion of some, is not granted such power. It is true the bureaucracy can propose regulations within the scope of statute. However they are severely limited to stay with the underlying statute upon which they must rely. All proposals are subject to extensive interdepartmental and department reviews, Congressional review, and ultimately subject to Court challenge of authority and scope of all regulations.

If no one challenges, obviously a regulation will stand, but in the gross instances you have served up challenge would be certain and swift from political factions, business and financial organizations, individuals and howls all across the spectum.

Congress for one does not simply ignore what going on, the may not act to thwart any particular proposed regulation coming up from the bureaucracy, but that is because they are essentially in unanimous agreement that the regulation is within their intent not for lack of concern.

Contrary to some apparent rumor you may have heard, even Congress is jeolous of its authority and perogative to challenge the proposals of upstart bureaucrats or executives. If a regulation does not meet intent and expectations of Congress, Congress & even Presidents have and very swiftly do act to slap down the proposals of uppity bureaucrats.

[Technogeeb]

Bureaucracy, contrary to the unimformed opinion of some, is not granted such power. It is true the bureaucracy can propose regulations within the scope of statute. However they are severely limited to stay with the underlying statute upon which they must rely.

But that's the whole problem; the underlying statutes grant far more power than is initially perceived and are written in such a way that they can be easily abused. GCA'68 assumed 12 guage shotguns would be legal, as the legislation mentions their suitability for sporting purposes. Under Clinton, treasury secretary Bensen was able to make some of those shotguns illegal simply by declaring, and publishing the ruling in the Federal Register, that they were not suitable for sporting purposes. Similarly, the proposed tax legislation allows a government "prebate" check to be sent to every household in the U.S., with the only limit on the amount of that handout being a number based on the "poverty level". But since the "poverty level" is based on a number that is itself subject to bureaucratic manipulation under other, pre-existing statutes, the proposed legislation gives far more power than it would initially seem.

If no one challenges, obviously a regulation will stand, but in the gross instances you have served up challenge would be certain and swift from political factions, business and financial organizations, individuals and howls all across the spectum

In the case of Bensen's misdeeds, the challenges (which were many) were futile. In the case of the HIPAA regulations, the challenges (and the associated great deal of effort in those challenges) were futile. We "howled", as did many other businesses and organizations. The effort accomplished nothing, and the Bush administration decided to implement the same stupid, oppressive rules that were drafted by the Clinton administration. Government isn't anywhere near as responsive as you might believe unless there is a strong political advantage in their being so.

Contrary to some apparent rumor you may have heard, even Congress is jeolous of its authority and perogative to challenge the proposals of upstart bureaucrats or executives. If a regulation does not meet intent and expectations of Congress, Congress & even Presidents have and very swiftly do act to slap down the proposals of uppity bureaucrats.

Congress is not sufficiently concerned about delegating power to bureaucracies, since they know they can reclaim it if they desire to do so. But history shows that they are quite content to allow bureaucracies to misuse their delegated power when it serves their purposes, since it allows a "third party" to be blamed for the misdeed rather than the ones really responsible (and just because the current congress might not be in the mood to allow them to use it as an instrument of socialism is no guarantee that a future congress might be composed of far more leftist individuals who would be more than willing to allow them to do so). In truth, the real villain behind Bensen's shotgun ban was not the Clinton administration, but the Congress of 1968 which passed the legislation (providing essentially unchecked power to the treasury department in the relevant matter) in the first place.

[ancient_geezer]

If there really was anything the public could do to stop such abuses of power by the bureaucracies, they would have been used to stop Bensen's shotgun ban (which the NRA or GOA would have attempted) or the HHS HIPAA regulations (which a huge number of medical, insurance, and software companies, not to mention privacy groups, opposed for very valid reasons).

Mere opposition does not a bad regulation make, there has to be a material error, malfeasance, misfeasance involved for challenge. If what is done is within the scope statute and in common practice of the art, or legislatively mandated methodology. Then you are out of luck unless Congress or the President makes the challenge by shooting the regulation down.

Intent of the statue as expressed within the language of statute is the key to a challenge at the judicial level. If a proposed statistical value, which is what is under discussion, can be shown to be erroneous in regard to the historically adopted standard or legislatively adopted standard. Then you have a decent basis for challenging the result.

In terms of your examples legislative intent was not an issue, nor a statistcally absurd CPI value which is what would be required to send a $150,000 FCA to anyone. A CPI error of the magnitude it would take to implement such a scheme is totally irrational. It would be totally irrational to see an advance of of even 3 standard devieations (21%) of one year's FCA over the current year much less an advance of some 15,000%. Any increase of FCA would also entail the increase of the NRST tax rate to compensate. A factor that would hit everyone right in the gut at much lower levels than your absurdity.

But then why not just some bureaucrat go out and start sending 150,000 checks to everyone, and not bother with FCA or the CPI. By your reasoning, no one would or could do anything about it so that bureaucrat can just as well go ahead and do it and be acclaimed a hero for buying a landslide victory and turn the country over to the communist party.

You reasoning is not just invalid, it is just plain absurd.

[Technogeeb]

Mere opposition does not a bad regulation make, there has to be a material error, malfeasance, misfeasance involved for challenge. If what is done is within the scope statute

And that's the whole point. The ability to ban shotguns was within the scope of GCA'68 because of the way it was written, even though that wasn't the desire of the authors (or at least they claimed it was not). In the same way, the ability to increase the "prebate" government handout to whatever level desired is within the scope of the proposed legislation, since they already have the administrative authority to manipulate the values upon which it is based and the legislation itself does not proactively limit that power in any way.

In terms of your examples legislative intent was not an issue, nor a statistcally absurd CPI value which is what would be required to send a $150,000 FCA to anyone. A CPI error of the magnitude it would take to implement such a scheme is totally irrational

Similar claims were made in defense of GCA'68 and the HIPAA legislation. Those who insisted it put into place the ability to ban certain firearms (or violate medical privacy) were assured that their fears were "absurd". Yet that same power WAS abused, even if it did take 25 years to abuse it (or 5 in the case of HIPAA). Your claim that the safeguards in place against abuse of administrative authority are nonsense, because such abuses have already occurred and their existence is well-documented. You can't logically claim something can't happen when it already has happened.

But then why not just some bureaucrat go out and start sending 150,000 checks to everyone, and not bother with FCA or the CPI.

Because the FCA gives him the illusion of legitimacy (in the same way that CGA'68 gave the gun banners the illusion of legitimacy) that he would not previously have; which is precisely why I don't want to give that power to the bureaucracy in the first place.

You reasoning is not just invalid, it is just plain absurd.

No, the reasoning of the bureaucrat would be absurd. But absurdity won't stop them. This is more than just a theoretical argument. There are already (relatively recent) historical examples of bureaucratic authority being misused in essentially the exact same way that I fear the proposed FCA / handout authority would be misused. You may claim that my reasoning is "invalid" or "absurd", but you ignore the fact that such abuses of bureaucratic authority have ALREADY happened, and to suggest the system is somehow immune to such manipulation in light of the historical fact that such manipulation has already occurred is foolish. It is you that are being absurd, by ignoring historical reality in favor of "trusting" the bureaucracy.

[ancient_geezer]

You've had your say, and I mine. I really see no purpose in continuing rehash of the the same issue. You don't like the idea of an FCA, and I do.

We both appear to agree the best of worlds would be without any exceptions and I'm fine with that.

Seeing that neither of us are in a position to force the legislation go into one mold or another. The issue is moot in anycase.

[mil-vet]

Very interesting! You're right, the "flat tax" proposal you post sucks - I base my preference for a flat tax on the very simple, (and therefore) very effective proposal espoused by candidate Forbes - got one of his campaign handouts, and it looked fine - none of the tripe the Armey proposal was in the plan I saw, and I am surprised (and disappointed) to see Forbes name on your posted data. RATS!

NRST - the "RS" stands for "RETAIL SALES"? This wouldn't turn into a "transaction" tax (any money which changes hands for any reason is taxed)? What percentage NRST do YOU think is most likely (ballpark figure)?

[ancient_geezer]

I base my preference for a flat tax on the very simple, (and therefore) very effective proposal espoused by candidate Forbes - got one of his campaign handouts, and it looked fine - none of the tripe the Armey proposal was in the plan I saw, and I am surprised (and disappointed) to see Forbes name on your posted data. RATS!

I would suggest you actually do a bit more research on what Forbes proposed, whenever he was asked for the legislative details of the proposal he pushed in his campaign he pointed to Armey's plan as his main blueprint.

For a good overview of what the Flat Tax does to business taxes, including Forbes version read:

Flat Tax as Seen by a Tax Preparer
by Vern Hoven

in fact when challenged on what his proposal was in that area, he stated essentially that businesses could figure the old way or under the flat tax way and choose whichever gave them the lower tax payment. Problem there, that is a automatic doubling of tax computation to ascertain which is the lower.

The problem of all income taxes lay in defining what is taxable income and what is not. Therein lay the burden of accounting, planning and litigation necessary to establishing the amounts to enter on a mundane form whatever its size. The Forbes & Armey Flat taxes do not reduce those rules by any appreciable amount, nor does either get rid of the IRS, who would be as busy as ever.

Sound-bytes always sound good! The devil is always in the implementation details, not the campaign soundbytes. Forbe's soundbytes would never get past the first challenge for revenue-neutality.

[ancient_geezer]

NRST - the "RS" stands for "RETAIL SALES"? This wouldn't turn into a "transaction" tax (any money which changes hands for any reason is taxed)?

No, the express rule in H.R.2525 is "tax once but only once", cascading tax schemes, which transaction taxes are, are expressly prohibited under the NRST. Retail is by definition in the bill, not a sale for business or investment purpose, and education is expressly defined as being investment.

H.R.2525
SPONSOR: Rep Linder, John (introduced 07/17/2001)
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
Refer: http://www.fairtax.org & http://www.salestax.org

You buy something, paying the NRST for it, you can turn around a sell that same thing and not collect another tax. Retail for the purposes of the bill, is the final sale that includes the tax. Business to business sales are not taxed if the product or service is for use in generating income. Businesses would only pay the NRST on items for final consumption, like Dixie cups for the company picnic.

What percentage NRST do YOU think is most likely (ballpark figure)?

Why ball park? The exact number is in the bill H.R.2525, 23%. 14.91% for general revenues + 8.09% SS/Mediscare funding.

Get rid of some programs going in:

 

23%........... HR2525 (NRST) rate

14.91% ..... rate if Social Security and Medicare were privatized
14% .......... rate if Nat'l Endowment for the Arts were eliminated
11.9%........ rate if Dept. of Education were eliminated
10% .......... rate if welfare were eliminated
9.8%.......... rate if foreign aid were eliminated
etc.

Hmmmmmm....... It's do able, with time and effort, once the blinders are removed from the electorate.

[mil-vet]

Another interesting reply! Thanks! I had missed the "tax only once" part - that's HUGE, since in the current system, the same money is taxed SO many times!!

The 23% is the figure I had always seen, but wasn't sure that was the ONLY level. Also, by your description (which is much easier for me to understand than the "legaleeze" of the proposal), I wouldn't be paying taxes on as many types of expenditure as I had thought (e.g., not on education costs).

Thanks for explaining instead of flaming! I'm a summa cum laude engineer and, I guess by stereotypical definition, have the damnedest problem reading and understanding the language used in contracts, court documents, government bills, etc.!! Give me Maxwell's equations instead.....LOL!!

[ancient_geezer]

I'm a retired programmer, legaleze is worse than hmmmm, come to think of it there is no worst than, its in a class all its own ;O)

[CliffC]

Howdy All:

Visit here: Family Consumption Allowance for YR 2002!

It's also sometimes called REBATE or PREBATE.

Visit here, too: FairTax Facts!

Cliff Cofer - West Des Moines, Iowa

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Bye, bye, Income Tax (and IRS)! We won't miss ya' at all!

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[ancient_geezer]

Thanks for the update Cliff.

[PhilWill]

Actually, it wouldn't tank the economy at all, it would stimulate it ... far more than the so-called "Economic Stimulus Package" that passed last year.

One small example .. if cutting taxes by $1.3 Tril over 10 years is stimulative, what would saving $2.5 Tril in compliance costs over the same period do?

And what about improving the price competitiveness of US goods vs our foreign competitors not only here in the US, but in foreign markets as well. Even ex IRS agent could find a job in THAT economy!!

[PhilWill]

The FairTax is revenue-neutral, meaning that it raises the same amount of $$ as the taxes it replaces. However, it does eliminate about $250 Bill in compliance costs annually, it puts illegal immigrants and foreign tourists on our tax rolls, and improves the price competiveness of US produced goods.

It would, however, make the taxes we all pay more visible, which should exert downward pressure on rates ... and therefore spending.

[PhilWill]

Home prices would be very stable, there is no reason to believe they would go down.

The purpose of the home mortgage deduction is to allow you to pay your mortgage interest with pre-tax dollars. With an NRST, you would pay EVERYTHING in pre-tax dollars. What would happen to Real Estate if interest rates dropped 25 - 30% because interest income was no longer taxable? It would be more valuable, not less!

[PhilWill]

I disagree with your point that the wealthy are getting screwed by the current system. When Jane Fonda and Ted Turner were getting divorced here in Atlanta, I saw an article on it. In the cases filed in court it was revealed that Mr. Turner had income of something like $125 mill for the previous year on which he paid taxes of about $5 mill. That's a rate of less than 5%. How would YOU like a 5% tax rate?

[PhilWill]

Snopercod, your house, car and boat are used ... they wouldn't be taxed anyway.

[PhilWill]

"Don't get yhour hopes up.Phil Graham and Dick Armey spent months on tour debating the merits of a sales tax vs. an income tax."

I believe that was Dick Armey and Billy Tauzin.